Minnesota Real Estate—The Buyer’s Market Continues in 2007!By: Teri Eckholm
Minnesotans can’t deny it any longer. It is a tried and true buyers market! Some homes are taking so long to sell that the elements are causing real estate signs to rust and the paint to chip of the wooden posts. There is little hope for a complete market turn around in 2007 but all is not lost. There are positive indicators on the horizon. At least there is hope for market-smart sellers who properly prepare and price their home to SELL.
So what is a Buyer’s Market? For many Minnesotan’s it may be hard to remember. The Twin Cities (and greater Minnesota) now has an inventory of homes on the market that is expected to last 3-4 months, with no new listings. In a typical area, a buyer might have 10-20 homes that will meet their needs and price parameters. If the buyer is flexible on location and amenities, they can have upwards of 50 homes to choose from. With so many options, home buyers are taking their time, becoming educated, and being very picky before making a home purchase.
There are some positive indicators out there. According to the Monthly Market Indicators from the Minneapolis Board of Realtors, the housing affordability index is very favorable with low interest rates and flat prices. The Fed stopped increasing the short-term interest rate at 5.25 percent and we are seeing 30-year mortgage rates at a very favorable 6 to 6 ½ percent.
So what should Minnesota homeowners do if they are considering selling their home?
Waiting is NOT a short-term option! It may be hard to wait out; a typical market swing can last 5-7 years. In fact, the Chief Economist David Lereah predicts “a sluggish housing market until 2008” due to a stand off between home sellers and potential buyers waiting for the market to turn in their favor. The best advise for selling in 2007 is to become market savvy, get your home ready and bring a sharp pencil to price your home to sell!
*Get your home in tiptop shape! Fix everything! Yes, that does mean you need to put on a new roof or fix the shower and strip off the ugly wallpaper in the kitchen. Whatever needs repair or is outdated needs to be addressed BEFORE the 1st Showing. Project houses do not sell well in a buyer’s market unless they are deeply discounted below appraised value.
*Work with an experienced Realtor to price your home realistically. The refinance appraisal you received last year will not be applicable. It is best to only consider SOLD comparables from your neighborhood during the past 3-6 months. Be mindful of what is for sale down the block and compare all of the amenities. Pricing a little higher than the home down the block because yours is a little better has backfired for most sellers this past year. Buyers are knowledgeable and taking their time to make a decision. If your home is overpriced, the buyer won’t consider it at all. In fact, Pricing to undercut the competition is one of the best strategies in this market.
*Keep in mind you do have competition for a buyer and be aware of who that competition is. It is not just the neighbor down the block. You are also competing with builders who have taken drastic measures by giving deep discounts and gifts to entice buyers to their models and spec homes. There are also many foreclosed homes that are owned by banks on the market. These homes are also priced very aggressively to generate a quick sale.
*Consider FSBO only as a last resort. This is not a market where an MLS listing and a sign in the yard will sell your home. Work with a professional Realtor to get the most from your investment. As part of their service, Realtors will outline a marketing plan including advertising and Internet promotions. But not all real estate agents are alike…Ask for specifics on how they intend to market your home.
*Be Patient! Even with professional marketing, it will take time but homes do sell in Buyer’s markets. It just takes longer both in preparation and duration.
Copyright 2007 Teri Eckholm